Deals & People November 11, 2024

Stout Discusses Draw of National Role at Prime Capital Financial

Plan adviser Jania Stout explained her transition to head Prime Capital’s retirement and wellness divisions, where her boss said she can be ‘jet fuel’ for the $30 billion advisory.

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Last week, Prime Capital Financial announced the hiring of Jania Stout as president of retirement and financial wellness.

Stout started in the retirement industry about 30 years ago, working at ADP Inc. and then at Fidelity Investments before co-founding a plan advisement firm. There, she helped build a team that eventually oversaw $13 billion in retirement assets and was acquired by OneDigital in 2021.

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Scott Colangelo, chairman of and manager partner in Prime Capital—and founder of its retirement division—equates hiring Stout to adding “jet fuel” to a fine-tuned machine. Stout says when she was approached about the opportunity, she saw it as a chance to both work with Colangelo and take her skills and experience to a national platform of advisers that includes 70 locations and about $30 billion in assets across workplace plans and individuals.

Stout is part of a handful of advisers changing firms after a major wave of aggregation. This year, Deana Calvelli, formerly of Creative Planning, joined NFP, an Aon company; former OneDigital advisers Joe DeBello and Katie Colon moved to CAPTRUST; and Jim Marx of Edelman Financial Engines moved to Alera Group’s growing retirement practice.

PLANADVISER spoke with Stout about her move and vision for this next stage of her career.

Jania Stout

PLANADVISER: Can you talk about how you first met Scott Colangelo?

JANIA STOUT: We were on a panel together at an internal Fidelity conference, and he was talking about what he was doing with helping people to manage their money. At the same time, I was focused on educating the employees. It was one of those panels where I was there to speak, but I was more intrigued listening to what he was talking about [regarding managed accounts] than what I was being asked about. At that time, he was doing things that nobody else was doing.

Fast forward 15-plus years, and managed accounts is a big topic in the plan advisory space. There are firms out there that are just now trying to get their arms around it, whereas I can join Scott, mix my ideas with his, and the sky’s the limit.

PLANADVISER: Why did you decide to leave your team, which you’ve had a lot of success with, for this role?

STOUT: I would say it’s more about where I’m going versus where I’m leaving. … I felt that I had a lot more I could give on a national platform. Prime Capital believed in me and believed in my thought leadership, and I saw the biggest opportunity to make that change.

I know it’s a big change—I left my team, my family … I consider them my family. I hired every one of them, hand-picked them. But they’re all very supportive. My clients are also very supportive and very excited for me, because they know what I have inside of me. I’m just so honored that Scott and Glenn [Spencer, CEO] at Prime Capital believed in me so much that they brought me over to lead the organization on the retirement and wellness side.

PLANADVISER: How has your time working at recordkeepers, then as an adviser, then running a team led to this role?

STOUT: I consider myself really lucky, because I’ve seen so many angles of this business. Being on the recordkeeping side has always been something that I think has helped me. It helped me understand what happens behind the scenes, and that knowledge led me to becoming a plan adviser. I felt like I could do more good in an independent role versus representing a platform.

When I think about, why now? Why leave such a successful team and clients that I adore? I think I can still make a bigger impact if I can influence and inspire a broader group of advisers. Coming over to Prime Capital in this leadership role, now I can help inspire hundreds of advisers and take all that knowledge that I have and that skill set and help lift them up and inspire them. … I like the idea of being “jet fuel,” as Scott said. It’s already a great organization, and I’m just going to come in and bring my energy and passion to help inspire people to do more good work.

PLANADVISER: What are key areas you’ll be focused on in retirement?

STOUT: Now that our industry has started to focus on managed accounts as well as retirement income—the decumulation side of things—we’re now really focused on doing better for the employees. I think that we’ve just scratched the surface of things as an industry. There’s so much more we can do.

I have, probably, done thousands of one-on-one financial coaching sessions over my years. I like interacting with employees and hearing what stresses them out, what’s making them nervous or worried. I think that just sticking everybody in a managed account and thinking that’s enough would be doing a disservice to them. We’ve got to keep pushing forward. There’s more that we can do to help the employees understand where they are. We’ve got to figure out a way to engage the participant and those employees that don’t raise their hand and say they need help. But we know they do need help, and because of that, I think that we’re going to get into areas that have never been explored before.

Compliance November 8, 2024

BMO Financial Next Up in Plan Forfeiture Legal Complaints

BMO received a complaint alleging its plan committee breached ERISA by using forfeited plan assets to benefit the company, not participants.

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BMO Financial Corp., a division of North America’s eighth-largest bank by assets, was the subject of a complaint seeking class action status regarding the use of 401(k) plan forfeitures by its retirement plan committee.

The complaint filed Wednesday in the U.S. District Court for the Central District of California adds it a growing list of plan committees being accused of not properly using forfeited funds under the Employee Retirement Income Security Act. BMO, whose parent, the Bank of Montreal, is based in Canada, wrote via email that the company “does not believe that these claims have merit and will be vigorously defending against them.”

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The suit was filed less than a week after a federal judge in the Northern District of California dismissed a similar lawsuit against Clorox Co.; the plaintiffs in that case were granted until November 12 to file a revised complaint with more specifics about the Clorox plan’s circumstances.

BMO has been added to a recent flurry of plan forfeiture lawsuits as the plaintiffs’ bar tests what some experts have described as a relatively common practice of using forfeited fees to pay down plan costs. The firm representing the plaintiff, John Shulak, is Haffner Law PC, which has filed other forfeiture suits, including one against Bank of America. Other firms hit with similar lawsuits include HP Inc., Intuit Inc., Qualcomm Inc. and Thermo Fisher Scientific Inc., the last of which had its case dismissed by the Southern District of California.

In Shulak vs. BMO Financial Corp., the plaintiff alleges that BMO and its benefits administration committee wrongfully used forfeited plan assets to reduce its employer contribution obligations, rather than for the benefit of participants. The plaintiff is seeking monetary damages for the alleged misuse, class action status for other participants in the plan at the time of the forfeiture uses, and dismissal of the plan committee members, among other requests for relief.

“Defendants’ allocation of forfeited fund assets to reduce its own employer contributions benefitted Defendants, but harmed the Plan and participants in the Plan, by reducing Plan assets, not allocating forfeited funds to participants’ accounts, and/or by causing participants to incur expenses that could otherwise have been covered in whole or in part by forfeited funds,” the complaint states. “By choosing to use forfeited Plan assets to benefit itself and not the Plan or the Plan’s participants, Defendants have placed its own interests above the interests of the Plan and its participants.”

The complaint claims that forfeitures were used to reduce company contributions of $1.28 million in 2023 and $1.18 million in 2022.

The plaintiffs allege a breach of duty under ERISA Rule 29 U.S.C. § 1104(a), by which a fiduciary must act in the sole interest of the participants and beneficiaries; Rule 29 U.S.C. §1103(c)(1), by which assets held in the plan must be used for the benefit of participants; Rule 29 U.S.C. § 1106, by which a fiduciary cannot use the plan for the benefit of a party in interest beyond the participants; and, finally, for BMO to not have properly monitored the plan committee’s work.

The BMO 401K Savings Plan had assets of $4.5 billion and 19,057 participants, as of the end of 2023, according to its Form 5500 filing.

In the Clorox case, as with others, the defendant argued that the use of forfeitures aligned with regulatory guidelines by going toward plan costs and that the use of such forfeitures was clearly laid out in plan documents.

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